Brian O'Driscoll is on standby to lead the British & Irish Lions into the decisive third Test against Australia amid fears that Sam Warburton's tour will end prematurely. The Welsh captain's chances of recovering in time from a hamstring problem are understood to be slight. (Updated: Sam Warburton has now been ruled out of the final Lions Test.)

Warburton sustained the injury in the final quarter of Saturday's painful 16-15 defeat that has left the series delicately balanced at 1-1 heading to Sydney and he is expected to fly to the Sunshine Coast from Melbourne on Monday to join his colleagues having undergone a scan over the weekend. His absence would be a further blow to the visiting pack, who have already lost Ireland's Paul O'Connell with a broken arm.

O'Driscoll has not led the Lions into a Test match since 2005, when he was invalided out of the series in the opening moments of the first Test against New Zealand in Christchurch. The 34-year-old will be making his final Lions appearance this weekend and is desperately hoping to round off his outstanding career with a series win at the fourth attempt.

Australia could also be deprived of their captain, James Horwill, depending on the outcome of Monday's fresh hearing into the stamping incident involving Alun Wyn Jones in the first Test in Brisbane. Horwill was originally cleared but the International Rugby Board has appealed the verdict and has appointed Canada's Graham Mew to re-examine the evidence.

The Lions will await news of the outcome keenly, having relocated to the Queensland beachside resort of Noosa to lick their wounds following Saturday's dramatic reverse. They are hopeful the Welsh centre Jamie Roberts and England prop Alex Corbisiero will be fit for the third Test and Andy Farrell, the assistant coach, believes the series is still very much up for grabs.

"There's absolutely no doubt we can turn this hurt around within a couple of days and give [the] performance we know we're capable of," Farrell said. "I don't think we've seen a fantastic performance out of this squad yet. Hopefully we'll see the best at the last hurdle on Saturday."

The Wallabies could have been 2-0 down had Leigh Halfpenny kicked a long-range penalty in the last minute and Farrell thinks the strain of fighting back from their first Test defeat to keep the series alive may yet take its toll on the home nation.

"We saw after the game emotionally what it meant to Australia, especially their captain. How much that takes out of them will be interesting. It's a do-or-die situation. We'll see how both teams now respond. They rose to the challenge on Saturday but it was a one-point ball game that could have gone either way. I think both teams will be confident going into next week."

The Lions also say the Wales scrum-half Mike Phillips will be fit for the third Test and strongly rejected suggestions the player was dropped from the second Test for unspecified disciplinary reasons. "Mike has been as good as gold on this tour," Farrell said. "He has been an absolutely brilliant professional, [as] you would expect a world-class senior player to be."

The 30-year-old Phillips has had an injection to ease a sore knee and is expected to return to the match-day squad. "He needed an [anti-]inflammation injection, that's all," Farrell said. "He needed that to settle down for him to be full steam ahead this week. He's fine and ready to go."

This will be the third successive Lions tour to Australia that has gone to a decisive third Test. The Lions won 19-18 in Sydney in 1989 but were beaten 29-23 on their most recent tour in 2001. They have not won a Test series anywhere for 16 years.